Reliance Bank can't do without the services of its hired loan auditors. But the bank's not that interested in having them fly in and stick around its Alabama digs for several days four times a year.
"You have the expense of flying them in, they're there a week, they have hotels, meals, etc. And that adds up," says David Kinchler, CEO of the $150 million-asset Reliance, which uses an expanding suite of document management software to allow three of its four yearly "hired" audits to be done remotely via a mailed disk containing images of thousands of internal loan documents-saving days of time and thousands of dollars for each audit (the bank still prefers to keep one of its yearly audits onsite).
It's among a number of cost and time saving benefits for the bank, which heretofore has been in the minority among community banks in embracing automated document management. That's likely to change as compliance, credit risk, security, customer retention and software price reductions align in 2010 to boost adoption among smaller banks-while financial institutions from all segments increase use to improve financial reporting and access controls.
Reliance Bank is also beefing up, expanding its deployment of Cabinet NG's document management technology with the addition of several enhancements, such as a feature that allows quicker filing of outside documents; bulk filing and the creation of a "frequently used" filing cabinet; a "super search" desktop app for Vista/Windows 7 that allows users to locate information in the flagship CNG-SAFE document management product by entering a word or number into a search field; and a "mind reader" feature that performs a search using data from the system's clipboard.
Reliance uses CNG-SAFE to make images of loan documents, which can be then downloaded onto a disk for easy, centralized access-avoiding the manual labor and mistakes inherent in managing paper.
"The paperwork becomes cumbersome to keep up with," Kinchler says. "And [in the past] documents would get shredded that didn't need to get shredded. If we have a paperless file, even if a document got shredded, it wouldn't be a problem."
Despite the benefits, community banks have not embraced document automation. "For small banks, it's usually because of the upfront investment, or they can't see the benefits because they're small and feel they already have their arms around the document challenge," says Sheri McLeish, an analyst for Forrester Research, who says providers include Hyland, EMC, Oracle and IBM, among other firms. "But usually the ROI for document management automation is pretty strong."
The reduction in paper use is also robust. "If you have to pull 25 loan files for an audit, you have to pull all of the guarantors and all of the information about them. And that may be stored somewhere else at the bank," says Brian Peckinpaugh, financial services manager for Hyland Software-whose document management and enterprise content management tools include ONBase.
Hyland is seeing increased activity from its 4,000 financial clients (out of 9,000 total customers), as institutions of all sizes seek to leverage document management automation and the use of core platforms to improve loan monitoring and financial performance reporting.
There's also other uses pertinent to auditing, such as the ability to create a trail of when documents are used. "You have security and revision control, since there's a time stamp on the documents," says Michelle Huff, director of product management for Oracle, which offers document management software though its Oracle Universal Content Management platform.
As an innovation, automated document management is not ground breaking, but the investment burden for banks is shrinking, and the scanners used to make images of documents have become commoditized and downright cheap. Coupled with the increasing importance of audits, reporting and other controls in the current banking environment, there's a better case for document automation than has existed before.
"Electronic document management systems have been around for years. They have been fairly expensive, but price points are coming down and the reason to use the systems has been going up," says Rod Nelsestuen, a research director for TowerGroup, who also says document management "as a service" should emerge shortly, which will bring costs down even more and provide additional enticement for adoption since banks will be billed as they use the technology.